Israel-Egypt Relations:
A Review of Bilateral Ties

(January 2003)

A Chronology
of Israel-Egypt Relations

The Peace Treaty between Israel and Egypt,
signed on March 26, 1979, constituted an historic milestone in the Arab-Israeli
Conflict. This was the first time that an Arab country had renounced
the armed struggle against Israel, and had recognized, by dint of a
binding agreement, the existence of Israel and its right to secure and
recognized borders.

The peace treaty was signed
a few years after the bloody Yom
Kippur War (also known as the October
War) that was launched on October 6, 1973.
Following the war, the countries engaged in
the first tentative diplomatic moves that
reached their apogee with President Sadat's
announcement of his readiness to visit Israel,
in order to begin talks with its leaders along
with his eventual arrival in Israel on November
19, 1977. During the visit, President Sadat
presented an address from the Knesset Podium, and following the visit, there was
a flurry of diplomatic activity, overseen
by the United States, including the Camp David
Summit of September 1978.

In the wake of the Peace
Treaty of 1979, Israel and Egypt established
full diplomatic relations. Israel's Embassy
in Cairo - the first of its kind in any Arab
country - was opened in February 1980, and
Egypt's Embassy in Israel was opened in March
1980. Aside from the peace treaty, Israel
and Egypt signed about 50 normalization agreements,
covering a variety of issues, including economic
and cultural matters, designed to enhance
peace between the two countries.

In spite of the bleak forecasts,
the peace treaty between Israel and Egypt
has withstood numerous difficult challenges,
including the assassination of President Sadat
on October 6, 1981, Operation
Peace for Galilee in 1982, the presence
of the IDF in Lebanon many years after the conclusion
of the aforementioned operation, and the Palestinian intifada which began in December 1987. Following
the signing of the peace treaty, Egypt was
suspended from the Arab League.

In spite of the fact that
the peace treaty was intended to serve as
a framework for the resolution of the entire
Arab-Israeli conflict (as Egypt claimed),
the continuation of the conflict has cast
a shadow over the relations between Israel
and Egypt. Thus, the Egyptian Ambassador,
Saad Murtada, was recalled to Cairo for consultations
in the wake of Operation Peace for Galilee
of 1982, and his successor was appointed after
only eight months. This step was repeated
in November 2000, following the eruption of
the violence in September of that year, with
the recall of Ambassador Mohammed Bassiouni
for consultations. To date, no successor has
been appointed. Moreover, following Operation
Defensive Shield of March 2002, the Egyptian
Government decided to suspend the inter-governmental
ties with Israel, with the exception of diplomatic
channels dealing with the Palestinian domain.

In spite of these difficulties and the opposition
of many groups in Egypt to the peace with Israel (exemplified by the
trade unions who prohibit any kind of normalization on the part of its
members with Israel or with Israelis), the two countries conduct diplomatic
relations, tourism ties and cooperation in trade and agriculture. In
addition, the Israeli Academic Center is active in Cairo. At present,
Israel seeks to enhance its relations with Egypt, and its efforts are
focusing on the return of the Egyptian Ambassador to Israel and the
consolidation of bilateral cooperation in various spheres, including
the advancement of the peace process in the region.

Bilateral
Agreements

The foundation stone of the peaceful relations
between Israel and Egypt is the "Peace
Agreement between the Arab Republic of Egypt
and the State of Israel" signed on March
26, 1979. The essence of the peace treaty
is the termination of the state of war between
the two countries, in return for an Israeli
withdrawal from the Sinai Peninsula.

The "Framework for
Peace in the Middle East" that was signed
at Camp
David on September 17, 1978 was added
as an Annex to the peace treaty. The second
part of the Framework Agreement concerned
the formula for the continuation of Israel
and Egypt's activities leading to the establishment
of a self-governing authority in the West
Bank and Gaza,
in order to provide full autonomy for its
inhabitants. The Agreement expresses an aspiration
for the establishment of other peace agreements
between Israel and its neighbours, following
the peace treaty with Egypt.

The peace treaty established
the termination of the state of war between
the two countries and the withdrawal of armed
forces and civilians from the Sinai, behind
the international boundary, and determined
the permanent boundary between Israel and
Egypt, with the exception of the border in
the Taba area, whose status was eventually
determined in 1988. The treaty prohibited
the use of force by one party against the
other, establishing that disagreements would
be resolved through peaceful means. The treaty
also established the right of free passage
through international waterways, including
passage through the Suez Canal, the Straits
of Tiran and Eilat.
It also sets forth the establishment of a UN force
to prevent violation of the security arrangements.
Ultimately, a Multinational Observer Force
was established, with American backing, as
a result of the UN's refusal to recognize
the peace treaty.

In the wake of the peace treaty, Israel and
Egypt signed normalization agreements, with
negotiations on most of these agreements continuing
until April 1982 - the date of the completion
of Israel's withdrawal from Sinai. These agreements,
formulated by a joint committee of experts,
presented in great detail the various political,
economic and cultural issues requiring normalization.

In 1989, following the arbitration ruling on the Taba
border line, Israel and Egypt reached two further agreements: one was
related to the establishment of a border on the sea coast and the second
was related to concessions for tourists arriving from Israel, passing
through the Taba terminal.

Trade Relations

Since the establishment of peace between Israel and
Egypt, the two countries have developed trade relations in a number
of realms, such as textiles, machinery, chemicals, vegetables and cotton.
The peace treaty clearly specifies that Israel will purchase Egyptian
oil on a regular basis. The level of trade, that has seen upturns and
downturns over the years, has been declining since the Palestinian
violence that erupted in September 2000.

Between 1994 and 2000, the total level of exports
from Israel to Egypt was valued at $181 million. In 2000, the Israeli
exports to Egypt were valued at $58.1 million. In 2001, Israeli products
were exported to Egypt, with a total value of $47.1 million (a drop
of 20 percent). Around half of the exports to Egypt were textile products.
The remaining exports included chemical products, fertilizers and oil
products. Israeli products accounted for around 0.3 percent of the overall
Egyptian imports for the year 2000.

Between 1994 and 2000, the imports from Egypt to Israel
reached a total of $1.606 billion. In 2001, Egypt imported goods (excluding
oil and services) to Israel with a total value of $20 million, in comparison
to a total of $20.7 million for 2000. Aside from oil, Egypt exports
fresh vegetables, raw cotton, textiles, wood products and chemicals.

Apart from trade, the two countries have established
agricultural cooperation, with an emphasis on arid-zone development,
irrigation, open-field plastic covered vegetable production, veterinary
vaccine production and the growth of fruit. Israel and Egypt are both
involved, together with the United States, in the operation of the NUBASEED
demonstration farm. The farm was established south of Alexandria, in
1987.

In the past, Israel ran a trade deficit in its trade
ties with Egypt. However, following the drop in oil imports from Egypt,
Israeli exports to Egypt are greater than the imports from the latter
country. There has also been a recent decline in the agricultural cooperation
between the two countries. Israel's efforts are now focused on the strengthening
of economic trade and cooperation as well as scientific cooperation.

Since the establishment of relations, there is tourism
between the two countries, with the Sinai Peninsula a popular site for
Israeli visitors - especially in the summer months. The flow of Israeli
tourists to Egypt reached a high of 415,000 in 1999. Since 2000, there
has been a decline in the number of tourists, although visits still
take place on an ongoing basis, albeit on a more limited scale. The
flow of Egyptian tourists to Israel reached a high of 28,000 in 1995,
with 2,500 visitors to Israel in the first half of 2002. Israel is making
an effort to increase the flow of tourists between the two countries.

The Jewish Community

Aside from biblical references to the Jews of Egypt,
a Jewish community in Egypt began to take shape in Alexandria in the fourth century BC, under Greek
rule. In addition, the Jewish community of Cairo took shape in the tenth
century CE, under Arab rule. One of the best-known members of this Community
was Maimonides who
settled in Cairo in 1165, and it was there that he wrote most of his
works. The Jewish community in Egypt prospered over hundreds of years,
with up to 150,000 Jews living in Cairo alone. At the beginning of the
twentieth century, the Jews of Cairo were free to print their newspapers
in French and Arabic, and twenty-nine synagogues were established. Jews
played significant roles in the cotton trade and in banking, assisting
in the establishment of the Egyptian National Bank. Streets and plazas
were named after Jews, and some were elected to serve in parliament.

The Arab-Israeli conflict exacted a heavy toll on
the Jewish community in Egypt. During the War
of Independence (1948), 2,000 members of the community were arrested.
On the eve of the war, the community was 75,000 strong. The Arab-Israeli
wars were accompanied by a wave of Jewish emigration from Egypt to Israel and other countries,
including France, the United
States, Canada and Brazil.
Following the Sinai Campaign of 1956, the Jewish community in Egypt numbered 40,000, dropping to
2,500 after the Six Day War of 1967, and declining further to 350, following the Yom
Kippur War of 1973. Today, there are only a few dozen Jews, with
most of them in their seventies or eighties.

Today, little remains of the rich heritage of Egyptian
Jewry. Books and religious artifacts have either been sold to collectors,
or they have been lost or stolen. Many of the synagogue buildings have
been sold, and others have been taken over, and are now under the control
of the Egyptian Ministry of Culture. The Ibn Ezra synagogue (tradition
has it that this was the location in which Moses was rescued from the
Nile) still serves as a tourism site.

Conclusion

Contrary to expectations, the peace between Israel
and Egypt is not a warm peace. There are certainly a number of areas
in which relations can be improved, whether in regard to the ties between
the peoples, trade ties and relations between the political leaders
of both countries. Nevertheless, the peace between Israel and Egypt
has withstood difficult challenges, proving that despite the many obstacles,
Israeli-Arab coexistence can be accomplished.